Show me the Money compensation strategy for managers

SHOW

COMPENSATION

ME THE MONEY

STRATEGIES FOR PEOPLE MANAGERS

all managers must decide how much to invest in each

individual on their team

you can invest a fixed amount of money and/or time

MONEY TIMECompensation, promotion, benefits, etc…

Coaching, mentorship, training, etc…

so, as a practical example, if you have 10 members on your team, $100,000 in comp, and 30 hours per week to support them, how

will you invest?

how much of your time & money do you invest in your top talent?

what about your weaker members?

what about everyone else?

what is fair? what is right?

what gets you and the firm the highest return on those

investments?

remember

it is a fixed pie that you have to work with, so you need to make

hard choices

start by dividing your workforce into 4 categories

CATEGORY OF WORKERSTARS

POTENTIALS

WORK HORSES

UNDER ACHIEVERS

and, since people fall roughly into standard deviations

it’s a good bet that your team will distribute roughly as follows

CATEGORY OF WORKER

% OF YOUR TEAM IN THIS CATEGORY OUTPUT AS A GROUP

STARS 10% 40%

POTENTIALS 30% 30%

WORK HORSES 50% 20%

UNDER ACHIEVERS 10% 10%

in your team of 10, you’ll have 1 star, 3 potentials, 5 work horses and 1 under

achiever

the star and potentials will add a vastly disproportionate value to your goals

here is my recommended investment strategy

CATEGORY OF WORKER

% OF YOUR TEAM IN THIS CATEGORY

YOUR BUDGET

YOUR TIME

STARS 10% 50% 10%POTENTIALS 30% 30% 50%WORK HORSES 50% 20% 20%UNDER ACHIEVERS 10% 0% 20%

why this distribution?

RULE ONEcomp your stars extremely well so

that they stay, and then get out of the way so that they can achieve

these guys don’t need much time. they are well trained already. all they

need are goals and air cover

RULE TWOPotentials have the highest return

on time

comp them above market, but invest a much greater relative

percentage of your time so that they become stars

RULE THREEComp your Work Horses fairly and

spend some time helping them understand & achieve their goals

But signal that while it is OK to, "just get the job done," if they stretch themselves towards the Potential

category, you'll respond with greater investments

RULE FOURDo not comp your under achievers

Instead, spend a disproportionate amount of time to help them retrain

and/or move out of the function where they are under performing and into another function where they can

become a star

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